Sao Paulo, 16 August. The campaign period officially begins on Tuesday, and increased coverage of candidates at public events and in the media should boost polls, sharpening the lines of the picture that will be painted in the October election.

According to experts listened to by Mover, the market has not yet begun to bet on the possible outcome of the presidential race and remains in question who will win the dispute.

“Market prices point to a scenario in which Lula and Bolsonaro are tied,” said Pedro Paulo Silveira, director of asset management at Nova Futura Investimentos.

“The market has not been priced yet. It’s a little bit connected between Lula and Bolsonaro if we look at the prices of some assets, such as interest rates and the stock market outlook,” said Andre Perfeito, chief economist at Necton Investimentos.

Nexgen Capital partner Jose Cassiolato said the market sees “a tough and unpredictable election race ahead that makes it difficult to see the outcome. In addition, there is a lot of uncertainty about the economic policy that will be implemented from next year.”

According to some experts, even though former PT president and Palacio do Planalto candidate Luiz Inácio Lula da Silva is leading the main polls, public stock prices prove what the market still doesn’t see clearly. In fact, President Jair Bolsonaro will be defeated in the elections.

“Looking at Petrobras in particular, it’s obvious. We can use the same reasoning for percentages and exchange rates. If the campaign shows momentum in one direction, prices will move,” commented Silveira, who believes the market will move into a “very pessimistic” mode if Lula’s candidacy demonstrates a high probability of winning. “The proposals of both are well known, and what will make the prices change is the probability of each of them winning,” he concluded.

Perfect, however, sees opportunities in the stock market, regardless of the polls. In general, he said, if Bolsonaro is re-elected, the shares of privatized state-owned companies tend to rise in price, and if Lula wins, companies related to the domestic sector, such as retail, construction and education, should do well.

According to Cassiolato, investors should now put emotions aside in order to analyze various companies and their opportunities, taking into account, in addition to elections, the current complex international scenario.

“Operating Advantage”

This week, a pre-election poll conducted by the FSB Institute commissioned by BTG Pactual and Ipec, ex-Ibope, showed Lula’s big advantage over Bolsonaro, even after the 600 reais augmented Auxílio Brasil began to circulate.

The FSB poll even showed that Lula managed to win more votes among the beneficiaries of the social program after the increase, while Bolsonaro, whose government was responsible for expanding aid, remained at the same level of voting intention.

In the FSB’s stimulated poll, Lula won 45% of the vote in the first round, compared to 41% in the previous round on 8 August. Bolsonaro retained 34% in both polls.

In the second round of the FSB poll, Lula increased his intention to vote from 51% to 53%, and Bolsonaro from 39% to 38%.

In the IPEC poll, Lula won 44% of the vote, while Bolsonaro gained 32% in the first round. In the runoff scenario, Lula scored 51% against the current president’s 35%, 16 percentage points behind.

According to political scientist Antonio Lavareda, with the start of the election campaign, Bolsonaro will try to close the distance with his rival, using two lines of communication.

“First, by saving Lava-Yato’s complaints to save the 2018 ‘climate’. Secondly, using the religious and value agenda, to maximize its leadership in the evangelical environment and regain 70% of the segment. who voted for him in the second round of the last election. Bolsonaro is currently preferred by 49% of voters in this profile, according to a BTG/FSB poll.

Bolsonaro should also try to capitalize on expanding aid with the approval of the Proposed Constitutional Amendment, known as PEC benefits. “The presidential campaign is betting on that,” Lavareda said.

The political scientist also recalled that Bolsonaro has a big trump card in his hands: “the advantage of the incumbent president”, that is, challenging the election in office, “which gives him control over the agenda, the social machine and the ability to ‘seduce’ slices of the government, the electorate” with social benefits .

Lula, in turn, has the advantage of her government’s collective memory. A March poll by Lavareda-led Ipespe found that 58% of Brazilian voters rated both Lula governments as excellent or good.

election campaign

Despite the strong online presence of candidates since 2021 and the importance of social media in past elections, Lavareda reminds us of the relevance of free advertising on television and radio as of August 26, and of greater coverage of candidates from now on.

“The president himself, by opting for a major party and making efforts to include other parties in his coalition, has shown that he recognizes the power of television and radio,” the political scientist argued, also mindful of the importance of numerous reports that talk about Bolsonaro’s hospitalization after a knife wounded in the 2018 campaign. “No one was more in the news than him,” he added.

Necton’s Perfect believes that the election campaign itself should not affect market sentiment, but it will interfere with the polls, which investors are eyeing more closely.

In addition, from now on, interviews and hearings of candidates will be intensified, and the market should react to their statements. In Bolsonaro’s case, investors are watching him clash with the Supreme Electoral Court and questions regarding electronic voting machines, reports Perfect.

Cassiolato added that the negative agendas of each candidate, as identified by their opponents, will be more pronounced at the start of the election campaign, which should also come at a price and introduce volatility into the market.

Text: Stephanie Rigamonti
Editing: Gabriela Guedes
Image: Vinicius Martins/Mover
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